mba-560 unit 4 problems

unit_4_templates_p_7-38_and_p_8-19.xlsx

Problem 7-28

Crume Inc-Effective interest amortization for a bond premium

Please see the attachment for full problem description.

Effective interest amortization for a bond premiumOn January 1, 2012, Crume Incorporated issued bonds with a face value of $100,000 a stated rate of interest of 9 percent, and a five year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 8 percent at the time the bonds were issued. The bonds sold for $103,993. Crume used the effective interest rate method to amortize bond discount.

Cash Payment Interest Expense Premium Amortization Carrying ValueJanuary 1, 2012 103,993December 31, 2012 9,000 8,319 681 103,312December 31, 2013 ? ? ? ?December 31, 2014 ? ? ? ?December 31, 2015 ? ? ? ?December 31, 2016 ? ? ? ?Total 45,000 41,007 3,993

b. What time(s) in the table would appear on the 2014 balance sheet?

c. What time(s) in the table would appear on the 2014 income statement?

d. What time(s) in the table would appear on the 2014 statement of cash flows?

  

Problem 8-19

 

midwest corp completed the following tranactions in 2012 the first year or operation1. issued 20,000 shares of 10$ par common stock at par.2.issued 2,000 shares of 30$ stated value preferred stock at 32$ per share3.purchased 500 shares of common stock as tresuary stock for 15$ per share.4.declared a five percent dividend on preferrred stock.5.sold 300 shares of tresuary stock for 18$ per share.6.paid the cash dividend on preferred stock that was declared in event four7. earned cash service revenue of 75,000 and incurred cash operating expenses of 42,0008.appropriated 6,000 of retained earningsrequireda. organize the transaction in accounts under an accounting equationb.prepare the stockholders equity section of the balance sheer as of december 31 2012

2

>P 7

– 3 8

0

-Jan-12

9,000

9,000

9,000

9,000

3,993

681

MBA

5 6 Student name
P 7-38, page 283
a. Date Cash Interest Premium Carrying Value
Payment Expense Amortization
1 10

3,993
31-Dec-12 9,000 8,319 681 103,312 This line is completed as an example.
31-Dec-13 8,265 735 102,577
31-Dec-1

4
31-Dec-15
31-Dec-16
Totals 45,000 41,007
face amount 100,000
stated int rate 0.09
b.
Balance Sheet – Bond

Payable effective int rate 0.08
premium or discount 103,993
c.
Income Statement – Bond Interest Expense
d. SCF – Operating Cash Interest Paid

P08-19

holders’ Equity

PIC in

Cash Payable Stock + Stock +

+

– Stock +

+ Earnings

1

x: Enter the appropriate amount or NA for not affected.
x: Enter the appropriate amount or NA for not affected. 2

3
4
5
6
8

= + + + + – + +

MIDWEST CORP.

x: Enter the appropriate amount or NA for not affected.
x: Enter the appropriate amount or NA for not affected.
x: Enter the appropriate amount or NA for not affected.
x: Enter the appropriate amount or NA for not affected.
x: Enter the appropriate amount or NA for not affected.
x: Enter the appropriate amount or NA for not affected.

Student Name:
Class:
Problem 08-19
Requirement a.
MIDWEST CORP.
Accounting Equation 2012
Assets = Liabilities + Stock
Event Dividends Preferred Common PIC in Treasury Retained App. Ret. Acct. Title
No. Exc. PS Exc. TS Earnings R/E
x: Enter the appropriate amount or NA for not affected.
7a
7b
Bal.
Requirement b.
Partial Balance Sheet
As of December 31, 2012
Stockholder’s Equity
Preferred Stock, $30 stated value, 2,000
shares issued and outstanding.
A satisfied Microsoft Office user: Enter the appropriate data in the yellow cells. Your entry for “Total Stockholders’ Equity” will be verified. Common Stock, $10 par value, 20,000 shares
issued and 19,800 outstanding.
Paid-In Capital in Excess of SV-Preferred Stock
Paid-In Capital in Excess of Cost-Treasury Stock
Total Paid-In Capital
Retained Earnings
Appropriated
Unappropriated
Total Retained Earnings
Less: Treasury Stock (200 shares)
Total Stockholder’s Equity

Sheet2

Sheet3

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